Last checked at 30 Mar 2011 11:01
RED ROCK RESOURCES PLC
("Red Rock" or the "Company")
Half-yearly report for the period ended 31 December 2010
30 March 2011 |
Red Rock Resources plc ("Red Rock" or the "Company") the mineral exploration and development company focused on iron ore and manganese, uranium and rare earths, and gold, and operating in Australia and East Africa, announces its unaudited half-yearly results for the six months ended 31 December 2010. |
Key Points:
·; Profit before taxation £12.867m (2009: £5.264m restated)
·; Total comprehensive income £29.138m (2009: £2.416m restated)
·; Total equity £41.932m (2009: £8.640m restated)
·; Earnings per share - basic 1.52 pence (2009: 0.90 pence)
·; Earnings per shares - diluted 1.45 pence (2009: 0.84 pence)
·; Significant contributions to profit from holdings in Jupiter Mines Limited, now included at market valuation rather than as an associate, and Ascot Mining plc
·; Mineras Four Points SA consolidated for the first time
·; Continued focus on development of gold operations in Kenya and Colombia
Chairman Andrew Bell commented: "The strengthening of the Company's position in the year to 30 June 2010 has continued, and this has begun to be appreciated by commentators and investors. The Company continues to progress into the second half-year and looks forward with confidence."
A copy of the half-yearly report is being posted to shareholders and will be available shortly from the Company's website at www.rrrplc.com.
Enquiries:
Andrew Bell | 0207 402 4580 or 07766 474849
| Red Rock Resources plc | Chairman
|
Sandra Spencer | 0207 402 4580 or 07757 660 798
| Red Rock Resources plc | Public and Investor Relations |
Peter Trevelyan-Clark/ Ben Jeynes
| 020 7444 0800 | Religare Capital Markets | Nominated Adviser |
Nick Emerson | 01483 413500 | Simple Investments Ltd | Broker |
Updates on the Company's activities are regularly posted on its website, www.rrrplc.com.
Chairman's statement
Dear Shareholders, We present to shareholders the Company's interim report for the six months to 31 December 2010. Financial discussion The strengthening of the Company's position in the year to 30 June 2010 has continued in the six months reported on, and this has begun to be appreciated by commentators and investors. It is gratifying to be able to report that Red Rock's share price rose from 1.80p on 30 June 2010 to 15.0p on 31 December 2010, a rise of 733.3%. Stronger trading in the Company's shares at higher prices enabled the Company to raise £4,072,866 through further equity issues during the six months to 31 December 2010. This compares with £385,462 raised by sales of investments, including shares in Jupiter Mines Ltd ("JMS"), and an increase in short-term borrowings of £980,065. In the year to 30 June 2010, the Company had raised £1,738,570 by share issues and £1,700,629 by sales of investments, with £813,463 of new borrowings, so the ratio between funding by share issues, investment sales, and debt was approximately 40:40:20. In the six months reported on 75% of funding was raised by new share issues, but subsequent to 31 December there have been further sales of JMS, and the Company expects that for the full year to 30 June 2011 the ratio between these three sources of funding will be nearer that seen in the previous financial year. Mining revenues will start to contribute in the current half-year, but are unlikely to have significant cash flow impact until the year beginning 1 July 2011. Even after sales of JMS shares last year and this, the Company is likely to go into the next reporting year retaining approximately 80% of its original holding, reflecting its confidence and involvement in the growth of JMS. In the period covered by the interim results, profit before taxation amounted to £12,867,632 (2009: £5,264,135 restated). This is an increase of 144.4% over the same period the previous year, and substantially higher than the audited figure of £4,754,557 for the whole of the year to 30 June 2010. Total comprehensive income rose to £29,138,217 from a restated £2,415,830 in the previous year, which compares with the audited figure of £1,941,761 for the whole year to 30 June 2010. As a result, the total equity of the Company ended the period at £41,932,489 (2009: £8,640,115 restated), a rise of 292.0% from an audited £10,697,024 total equity six months earlier on 30 June 2010. Significant contributions to profit came from the holdings in securities of JMS and Ascot Mining plc ("Ascot"). Upon the conclusion of the substantial transaction whereby JMS acquired an interest in the Tshipi manganese mine, Red Rock's interest in JMS dropped below 20% and JMS ceased to be accounted for as an associate, so that a profit on transfer to the investments category arose as we included the shareholding at market valuation; any future profits or losses from sale of JMS shares will be booked as gains or losses on sales of investments. Also the Company's acquisition of securities in Ascot occurred at below the market price, giving rise to an immediate accounting profit. The main contributor to the changes in total comprehensive income and in the statement of financial position was the substantial unrealised gains on investments, including the unrealised gains on JMS and Ascot. The balance sheet includes the first consolidation of our interest in Mineras Four Points SA, as required under IFRS rules, even though the option to take a 51% interest was not exercised until 4 March 2011. Gold and diamond explorer Kansai Mining Corporation, in which Red Rock has a 35.2% interest, announced an offer for two of its subsidiaries which, if it proceeded as announced, would result in a substantial profit to us; in the absence of documentation we have not attributed a value to this offer.
Chairman's statement, continued Operational discussion The Company continues to focus on the development of its gold operations in Kenya and Colombia and has since the period end also acquired an option to enter into an earn-in agreement in early stage iron ore exploration assets in Greenland. In Kenya a substantial drill programme started in November 2010 after completion of the VTEM and magnetic/radiometrics airborne geophysics. The objectives of this programme are to give increased confidence to the 1.2m oz of gold Indicated Resource that has been declared under NI 43-101, to increase understanding of structure and geology, and to extend and improve the declared Resource. At the same time a number of new targets are being explored, and VTEM copper targets around the old Macalder VMS copper-gold mine are to be drilled. Over 3,700m has been drilled of the planned 5,000 to 10,000m, and the programme continues. A JORC Indicated Resource of 1.424m tons at 1.64 g/t gold was declared at the Macalder tailings during the period, following an earlier drill programme, and the second and final phase of the metallurgical testwork is expected to be completed in April 2011. In Colombia we agreed to lend US$2,000,000 to a local company to refurbish and bring back into operation an old gold mine and plant. Renewed operations at the El Limon began in November 2010, and after a running in and desnagging period ore processing quantities are being increased and gold is being produced, while the Machuca mine has also been brought into production. On 4 March 2011 we exercised our option to take a 51% stake in our local partner, and new management has been introduced to strengthen operations. In Tasmania the Company completed a five hole drilling programme at its Arthur River tenement but while magnetite was discovered in all holes, it was not of sufficient quality to be likely to be an economic deposit.. Red Rock's associated companies JMS and Resource Star Ltd ("RSL") also saw progress during the reporting period, as did other investments. JMS completed the Tshipi transaction, ceasing to be an associate thereby, and stepped up the pace of its drilling at the Mt Ida magnetite project in Western Australia, where early in 2011 it was able to declare a substantial JORC Inferred Resource of 530m tons of 31.94% Fe, and is now moving towards a planned feasibility study. Red Rock has a 1.5% gross production royalty over this project. RSL also declared a JORC Inferred Resource over the Livingstonia uranium project in northern Malawi. In November 2010 Red Rock took a substantial interest on favourable terms in Ascot, and as a result of this investment Ascot was able immediately to announce the bringing into operation of the Chassoul gold mine in Costa Rica. The Company continues to progress, and looks to the future with confidence. |
Andrew Bell |
Executive Chairman |
30 March 2011 |
Consolidated statement of income
for the period ended 31 December 2010
Notes | 6 months to 31 December 2010 | 6 months to 31 December 2009 | ||
Unaudited£ | Unaudited£ | |||
As restated | ||||
Revenue | ||||
Management services | 1,002 | 1,171 | ||
Sale of minerals | 507,472 | - | ||
Total revenue | 508,474 | 1,171 | ||
Net gains from other sales | ||||
Gains/(losses) on sales of investments | 74,494 | 77,962 | ||
Gains on sales of exploration assets | - | 3,491,369 | ||
Gain on recognition of contracts in relation to Ascot Mining Plc | 950,135 | - | ||
Profit on transfer of investment from/to associate | 13,978,109 | 2,018,255 | ||
Total net gains from other sales | 15,002,738 | 5,587,586 | ||
Total revenue and net gains from sales | 15,511,212 | 5,588,757 | ||
Cost of sale of minerals | (588,297) | - | ||
Gain on dilution of interest in associate | 257,159 | 116,084 | ||
Impairment of investment in associate | (70,298) | - | ||
Exploration expenses | (157,916) | (57,754) | ||
Administrative expenses | (1,481,123) | (286,968) | ||
Share of losses of associates | (163,195) | (93,902) | ||
Finance costs (net) | (439,910) | (2,082) | ||
Profit for the period before taxation | 12,867,632 | 5,264,135 | ||
Tax expense | (3,673,065) | (907,018) | ||
Profit for the period | 9,194,567 | 4,357,117 | ||
Profit for the period attributable to: | ||||
Equity holders of the parent | 9,780,255 | 4,357,117 | ||
Non controlling interest | (585,688) | - | ||
9,194,567 | 4,357,117 | |||
Earnings per share | ||||
Earnings per share - basic | 3 | 1.52 pence | 0.90 pence | |
Earnings per share - diluted | 3 | 1.45 pence | 0.84 pence |
All of the operations are considered to be continuing.
The accompanying notes form an integral part of this half-yearly report.
Consolidated statement of comprehensive income
for the period ended 31 December 2010
Notes | 6 months to 31 December 2010 | 6 months to 31 December 2009 | ||
Unaudited£ | Unaudited£ | |||
As restated | ||||
Profit for the period | 9,194,567 | 4,357,117 | ||
Surplus on revaluation of available for sale investments | 27,151,131 | 46,200 | ||
Deferred taxation on revaluation of available for sale investments | (7,330,805) | (242,714) | ||
Other comprehensive effects of investments transferred to the income statement on sale or reclassification | (5,867) | (1,856,582) | ||
Group's share of associates' other comprehensive income | 51,801 | 76,985 | ||
Deferred tax on group's share of associates other comprehensive income | (12,402) | - | ||
Exchange gains on subsidiary's converting to presentational currency | 212,906 | - | ||
Unrealised foreign currency (loss)/gain arising upon retranslation of foreign operations | (123,114) | 34,824 | ||
Total comprehensive income for the period | 29,138,217 | 2,415,830 | ||
Total comprehensive income for the period attributable to: | ||||
Equity holders of the parent | 29,510,999 | 2,415,830 | ||
Non controlling interest | (372,782) | - | ||
29,138,217 | 2,415,830 | |||
The accompanying notes form an integral part of this half-yearly report.
Consolidated statement of financial position
as at 31 December 2010
Notes | 31 December 2010 | 31 December 2009 | 30 June 2010 | 30 June 2009 | ||||
Unaudited£ | Unaudited£ | Audited£ | Audited£ | |||||
ASSETS | As restated | As restated | ||||||
Non current assets | ||||||||
Property plant and equipment | 7 | 2,333,735 | - | 5,100 | - | |||
Investments in associates | 8 | 1,214,217 | 8,009,827 | 7,332,533 | 1,044,853 | |||
Available for sale financial assets | 51,396,383 | 1,197,719 | 1,373,680 | 3,676,909 | ||||
Exploration assets | 335,182 | 685,341 | 295,616 | 506,230 | ||||
Total non current assets | 55,279,517 | 9,892,887 | 9,006,929 | 5,227,992 | ||||
Current assets | ||||||||
Cash and cash equivalents | 111,251 | 231,019 | 563,198 | 49,439 | ||||
Trade and other receivables | 2,132,485 | 384,486 | 1,126,897 | 274,542 | ||||
Inventories | 294,287 | - | - | - | ||||
Total current assets | 2,538,023 | 615,505 | 1,690,095 | 323,981 | ||||
TOTAL ASSETS | 57,817,540 | 10,508,392 | 10,697,024 | 5,551,973 | ||||
EQUITY AND LIABILITIES | ||||||||
Equity attributable to owners of the parent | ||||||||
Called up share capital | 682,439 | 555,818 | 583,908 | 464,843 | ||||
Share premium account | 9,971,707 | 5,942,529 | 6,347,920 | 4,853,650 | ||||
Other reserves | 19,523,223 | (774,742) | (350,069) | 1,166,545 | ||||
Retained earnings | 11,835,889 | 2,916,510 | 2,017,768 | (1,440,607) | ||||
42,013,258 | 8,640,115 | 8,599,527 | 5,044,431 | |||||
Non controlling interest | (80,769) | - | - | - | ||||
Total equity | 41,932,489 | 8,640,115 | 8,599,527 | 5,044,431 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Trade and other payables | 2,028,016 | 390,986 | 235,058 | 179,983 | ||||
Short term borrowings | 1,740,388 | - | 760,323 | - | ||||
Current tax liabilities | 909,030 | - | 909,030 | - | ||||
Total current liabilities | 4,677,434 | 390,986 | 1,904,411 | 179,983 | ||||
Non current liabilities | ||||||||
Deferred tax liabilities | 11,207,617 | 1,477,291 | 193,086 | 327,559 | ||||
Total non current liabilities | 11,207,617 | 1,477,291 | 193,086 | 327,559 | ||||
TOTAL EQUITY AND LIABILITIES | 57,817,540 | 10,508,392 | 10,697,024 | 5,551,973 | ||||
The accompanying notes form an integral part of this half-yearly report.
Consolidated statement of changes in equity
for the period ended 31 December 2010
The movements in equity during the period were as follows:
Share capital | Share premium account | Retained earnings | Non controlling interest | Other reserves | Total equity | |
Unaudited | £ | £ | £ | £ | £ | £ |
As at 30 June 2009 | 464,843 | 4,853,650 | (1,511,476) | - | 1,564,973 | 5,371,990 |
Retrospective restatement of errors | - | - | 70,869 | - | (398,428) | (327,559) |
Restated balance | 464,843 | 4,853,650 | (1,440,607) | - | 1,166,545 | 5,044,431 |
Changes in equity for 2009 | ||||||
Total comprehensive income/(loss) for the period | - | - | 4,357,117 | - | (1,941,287) | 2,415,830 |
Transactions with owners | ||||||
Issue of shares | 90,975 | 1,208,114 | - | - | - | 1,299,089 |
Share issue and fundraising costs | - | (119,235) | - | - | - | (119,235) |
Total Transactions with owners | 90,975 | 1,088,879 | - | - | - | 1,179,854 |
As at 31 December 2009 | 555,818 | 5,942,529 | 2,916,510 | - | (774,742) | 8,640,115 |
As at 30 June 2010 | 583,908 | 6,347,920 | 2,017,768 | - | (350,069) | 8,599,527 |
Changes in equity for 2010 | ||||||
On acquisition of subsidiary | - | - | - | 292,013 | - | 292,013 |
Total comprehensive income/(loss) for the period | - | - | 9,780,255 | (372,782) | 19,730,744 | 29,138,217 |
Transactions with owners | ||||||
Issue of shares | 98,531 | 3,974,335 | - | - | - | 4,072,866 |
Share issue and fundraising costs | - | (350,548) | - | - | - | (350,548) |
Share based payments | - | - | 37,866 | - | 142,548 | 180,414 |
Total Transactions with owners | 98,531 | 3,623,787 | 37,866 | - | 142,548 | 3,902,732 |
As at 31 December 2010 | 682,439 | 9,971,707 | 11,835,889 | (80,769) | 19,523,223 | 41,932,489 |
Available for sale trade investments reserve | Associate investments reserve | Foreign currency translation reserve | Share based payment reserve | Total other reserves | |
Unaudited | £ | £ | £ | £ | £ |
As at 30 June 2009 | 1,549,735 | (126,780) | 6,750 | 135,268 | 1,564,973 |
Retrospective restatement of errors | (433,926) | 35,498 | - | - | (398,428) |
Restated balance | 1,115,809 | (91,282) | 6,750 | 135,268 | 1,166,545 |
Changes in equity for 2009 | |||||
Total comprehensive income/(loss) for the period | (2,053,096) | 76,985 | 34,824 | - | (1,941,287) |
Transactions with owners | |||||
Share based payments | - | - | - | - | - |
As at 31 December 2009 | (937,287) | (14,297) | 41,574 | 135,268 | (774,742) |
As at 30 June 2010 | (353,517) | (126,226) | (2,589) | 132,263 | (350,069) |
Changes in equity for 2010 | |||||
Total comprehensive income/(loss) for the period | 19,820,326 | 33,532 | (123,114) | - | 19,730,744 |
Transactions with owners | |||||
Share based payments | - | - | - | 142,548 | 142,548 |
As at 31 December 2010 | 19,466,809 | (92,694) | (125,703) | 274,811 | 19,523,223 |
Consolidated statement of cash flows
for the period ended 31 December 2010
Notes | 6 months to 31 December 2010 | 6 months to 31 December 2009 | ||
Unaudited£ | Unaudited£ | |||
As restated | ||||
Cash flows from operating activities | ||||
Profit before taxation | 12,867,632 | 5,264,135 | ||
Increase in receivables | (508,903) | (113,834) | ||
Increase in payables | 665,312 | 211,003 | ||
Increase in inventories | (294,287) | - | ||
Share of losses in associates | 163,195 | 93,902 | ||
Interest receivable | (1,012) | (6,182) | ||
Interest payable | 52,307 | 8,264 | ||
Finance costs | 388,615 | - | ||
Exploration expenses | 157,916 | 57,754 | ||
Share based payments | 180,414 | - | ||
Currency adjustments | 94,679 | 34,825 | ||
Impairment of associate | 70,298 | - | ||
Gain on recognition of contracts in relation to Ascot Mining Plc | (950,135) | - | ||
Gain on dilution of interest in associates | (257,159) | (116,084) | ||
Gains on sales of investments | (74,494) | (77,962) | ||
Profit on transfer of available for sale investment to associate | (13,978,109) | (2,018,255) | ||
Depreciation | 132,828 | - | ||
Profit on disposal of exploration properties | - | (3,487,479) | ||
Income taxes paid | (1,741) | - | ||
Net cash outflow from operations | (1,292,644) | (149,913) | ||
Cash flows from investing activities | ||||
Interest received | 1,012 | 6,182 | ||
Interest paid | (52,307) | (8,264) | ||
Proceeds of sale of investments | 385,462 | 586,595 | ||
Payments to acquire investments | (2,514,972) | (1,059,477) | ||
Exploration expenditure | (160,884) | (373,397) | ||
Net cash acquired on gain of control of subsidiary | 6 | 4,974 | - | |
Payments to acquire property plant and equipment | (1,136,356) | - | ||
Net cash flows from investing activities | (3,473,071) | (848,361) | ||
Cash flows from financing activities | ||||
Proceeds from issue of shares | 4,072,866 | 1,299,089 | ||
Transaction costs of issue of shares | (350,548) | (119,235) | ||
Finance costs | (388,615) | - | ||
Proceeds of new borrowings | 980,065 | - | ||
Net cash flows from financing activities | 4,313,768 | 1,179,854 | ||
Net (decrease)/increase in cash and cash equivalents | (451,947) | 181,580 | ||
Cash and cash equivalents at the beginning of period | 563,198 | 49,439 | ||
Cash and cash equivalents at end of period | 111,251 | 231,019 | ||
Half-yearly report notes
for the period ended 31 December 2010
1 | Company and group |
As at 30 June 2010 and 31 December 2010 the Company had one or more operating subsidiaries and has therefore prepared full and interim consolidated financial statements respectively. |
The Company will report again for the year ending 30 June 2011.
The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the year ended 30 June 2010 has been extracted from the statutory accounts for the Group for that year. Statutory accounts for the year ended 30 June 2010, upon which the auditors gave an unqualified audit report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. |
2 | Accounting Polices |
Basis of preparation | |
The consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting.' The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2010, which have been prepared in accordance with IFRSs |
3 | Earnings per share | 6 months to 31 December 2010 | 6 months to 31 December 2009 | |
Unaudited£ | Unaudited£ | |||
As restated |
These have been calculated on profit for the period after taxation of: | 9,780,255 | 4,357,117 | ||
Weighted average number of Ordinary shares of £0.001 in issue | 644,355,471 | 486,412,093 | ||
Earnings per share - basic | 1.52 pence | 0.90 pence | ||
Weighted average number of Ordinary shares of £0.001 in issue inclusive of outstanding options | 674,805,743 | 516,412,093 | ||
Earnings per share fully diluted | ||||
1.45 pence | 0.84 pence |
The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows: |
2010 | 2009 | |||
Number | Number | |||
Earnings per share denominator | 644,355,471 | 486,412,093 | ||
Weighted average number of exercisable share options | 30,450,272 | 30,000,000 | ||
Diluted earnings per share denominator | 674,805,743 | 516,412,093 |
Half-yearly report notes
for the period ended 31 December 2010, continued
4 | Segmental analysis |
Since the last annual financial statements the group has added an additional segment to its operations. This segment relates to its operational mine in Columbia held by its newly acquired subsidiary Mineras Four Points S.A. |
Jupiter Mines Limited | Other investments | Australian exploration | Columbian mining | Corporate and unallocated | Total | ||
For the 6 month period to 31 December 2010 | £ | £ | £ | £ | £ | £ | |
Revenue | |||||||
Total segment external revenue | - | - | - | 507,472 | 1,002 | 508,474 | |
Result | |||||||
Segment results | 14,047,613 | 842,955 | (16,646) | (583,947) | (982,433) | 13,307,542 | |
Profit before tax and finance costs | 13,307,542 | ||||||
Interest receivable | 1,012 | ||||||
Interest payable | (52,307) | ||||||
Finance costs | (388,615) | ||||||
Profit before taxation | 12,867,632 | ||||||
Taxation expense | (3,673,065) | ||||||
Consolidated profit for the period | 9,194,567 |
Jupiter Mines Limited | Other investments | Australian exploration | Columbian mining | Corporate and unallocated | Total | ||
For the 6 month period to 31 December 2009 | £ | £ | £ | £ | £ | £ | |
Revenue | - | - | - | - | 1,171 | 1,171 | |
Result | |||||||
Segment results | 2,040,437 | 77,962 | 3,491,369 | - | (343,551) | 5,266,217 | |
Profit before tax and finance costs | 5,266,217 | ||||||
Interest receivable | 6,182 | ||||||
Interest payable | (8,264) | ||||||
Profit before taxation | 5,264,135 | ||||||
Taxation expense | (907,018) | ||||||
Consolidated profit for the period | 4,357,117 |
A measure of total asset and liabilities for each segment is not readily available and so this information has not been presented. |
Half-yearly report notes
for the period ended 31 December 2010, continued
5 | Prior period adjustment |
In the year to 30 June 2008 and 30 June 2009 deferred tax in relation to the groups available for sale investments and associates had incorrectly not been provided. Also, in the interim financial statements for the period to 31 December 2009 the Groups investment in Jupiter Mines Limited ("Jupiter") had been treated as an available for sale asset. By the year end it had been confirmed that the level of the Groups interest in Jupiter called for Jupiter to be treated as an investment in associate.
The financial statements for the year ended 2009 and the interim financial statements for period ended 31 December 2009 have been restated to correct both of these errors. The effect of the restatement on those financial statements is summarised below: |
Effect on the 6 month period to 31 December 2009 | Cumulative effect to the 30 June 2009 | |||
£ | £ | |||
Increase in profit on transfer of investment to associate | 2,018,255 | - | ||
Increase in exceptional gain on dilution of interest in associate | 116,084 | - | ||
Increase in share of losses of associate | (93,902) | |||
Decrease in tax expense in the income statement | - | 70,869 | ||
Increase in profit for the period/Decrease in loss for the year | 2,040,437 | 70,869 | ||
Decrease in revaluation of available for sale investments | (825,056) | - | ||
Increase in gains on revaluation of available for sale investments reclassified to the statement of income | (1,856,582) | - | ||
Increase in share of other comprehensive income of associate | 76,985 | - | ||
Increase in tax expense in other comprehensive income | - | (398,428) | ||
Decrease in total comprehensive income for the year | (564,216) | (327,559) | ||
Increase in investment in associate | 7,473,607 | - | ||
Decrease in available for sale investments | (8,037,823) | - | ||
Increase in deferred tax liability | - | (327,559) | ||
Decrease in equity | (564,216) | (327,559) |
Half-yearly report notes
for the period ended 31 December 2010, continued
6 | Acquisition of subsidiary |
On 7 July 2010 the company signed an option to acquire 51% of the share capital of the Columbian company Mineras Four Points SA ("MFP") for US$ 7,500,000.
Although as at 31 December 2010 the company held no interest in MFP, IAS 27 deems that this option gives the company effective control of MFP and as such it should be consolidated as a subsidiary.
The primary reason for the contract was for the company to provide financial and technical support to MFP in order to increase production at the El Limon mine facility.
The transaction has been accounted for using the acquisition method of accounting. |
Fair value | ||
7 July 2010 | ||
Net assets acquired: | £ | |
Property, plant and equipment | 1,366,592 | |
Trade and other receivables | 48,093 | |
Cash and cash equivalents | 4,974 | |
Total assets | 1,419,659 | |
Trade and other payables | 1,123,950 | |
Tax payables | 3,696 | |
Total liabilities | 1,127,646 | |
Fair value of identifiable total assets and liabilities | 292,013 | |
Non controlling interest | 292,013 | |
Goodwill | - | |
Total consideration (excluding direct costs) | - | |
Cash consideration paid | - | |
Cash and cash equivalents acquired | 4,974 | |
Net cash inflow arising from business combinations | 4,974 |
The non-controlling interest on acquisition of £292,013 has been recognised as 100% of the net assets of MFP as the company does not hold an equity interest. |
Of the gross contractual trade and other receivables at the acquisition date of £48,093, £nil are not expected to be collected. |
MFP contributed £507,472 of revenue and £585,688 of net loss for the period between the date of acquisition and the reporting date. If this acquisition had occurred on 1 July 2010 the Group's revenue and net profit would have been unchanged. |
On 4 March 2011, the Company exercised its option over 51% of the equity in MFP by a series of transactions as follows: ·; The Columbian shareholders of the issued share capital of MFP formed a new Cayman Island holding company, American Gold Mines Limited. ·; The Columbian shareholders transferred 51% of their shares in MFP to American Gold Mines Limited. ·; The Columbian shareholders sold 100% of their interest in American Gold Mines Limited to the Company. The consideration paid and payable by the Company to the Columbian shareholders was as follows: ·; US$ 5,502,000 payable immediately or on completion of a loan agreement ·; US$ 1,000,000 deferred until MFP produces 150 tonnes of ore per day for a continuous 90 day period ·; US$998,000 payable only when MFP achieves a net operating profit of US$ 10,000,000 in one year.
The initial accounting for this transaction is incomplete at the date of signing these interim financial statements. As such the disclosures required by IFRS 3 are not presented. |
Half-yearly report notes
for the period ended 31 December 2010, continued
7 | Property plant and equipment |
As discussed in note 6, on 7 July 2010 the company acquired a new subsidiary, Mineras Four Points S.A. This acquisition introduced a considerable amount of property plant and equipment into the group, as detailed below. |
Field equipment | Office equipment | Mining equipment | Mining properties | Total | ||
£ | £ | £ | £ | |||
Cost | ||||||
As at 1 July 2010 | 7,445 | - | - | - | 7,445 | |
Acquired through business combinations | - | 1,125 | 48,501 | 1,316,966 | 1,366,592 | |
Additions in the period | - | 42,898 | 495,893 | 597,565 | 1,136,356 | |
Exchange differences | 69 | (35) | (1,983) | (39,530) | (41,479) | |
At 31 December 2010 | 7,514 | 43,988 | 542,411 | 1,875,001 | 2,468,914 | |
Depreciation | ||||||
As at 1 July 2010 | (2,345) | - | - | - | (2,345) | |
Charge for the period | (1,213) | (2,794) | (49,055) | (79,766) | (132,828) | |
Exchange differences | (6) | - | - | - | (6) | |
At 31 December 2010 | (3,564) | (2,794) | (49,055) | (79,766) | (135,179) | |
Net book value | ||||||
At 31 December 2010 | 3,950 | 41,194 | 493,356 | 1,795,235 | 2,333,735 | |
At 30 June 2010 | 5,100 | - | - | - | 5,100 |
Depreciation expense of £132,828 (2009: £nil) has been charged to administration expenses. |
8 | Investments in associates |
During the 6 months to 31 December 2010 the company's investment in its associate Jupiter Mines Limited (Jupiter"), was diluted by an equity share issue by Jupiter, of 946,411,458 ordinary shares on 8 November 2010. This issue reduced the company's investment in Jupiter from 21.68% to 6.25%.
Jupiter was therefore not considered to be an associate from 8 November 2010. The fair value of the groups holding in Jupiter on this date was £20,481,889 by reference to the market price of Jupiter shares. |
8 November 2010 | ||
£ | ||
Fair value of company's equity holding in Jupiter | 20,481,889 | |
Carrying value of company's investment in associate | (6,510,719) | |
Profit on reclassification of investment from associate to available for sale | 13,971,170 | |
Amounts previously recognised in other comprehensive income transferred to the income statement on reclassification of investment from associate to available for sale | 6,939 | |
Income statement profit on reclassification of investment from associate to available for sale | 13,978,109 |
Half-yearly report notes
for the period ended 31 December 2010, continued
9 | Share Capital of the company |
The authorised share capital and the called up and fully paid amounts were as follows: |
Authorised | Number | Nominal£ | ||
At incorporation on 8 September 2004 and as at 31 December 2010, Ordinary shares of £0.001 each | 10,000,000,000 | 10,000,000 | ||
Called up, allotted and fully paid during the period | ||||
As at 30 June 2010 | 583,908,807 | 583,908 | ||
Issued 7 July 2010 at 1.62 pence per share | 15,042,190 | 15,042 | ||
Issued 12 August 2010 at 2.19 pence per share | 13,723,094 | 13,723 | ||
Issued 20 August 2010 at 2.05 pence per share | 15,000,000 | 15,000 | ||
Issued 13 September 2010 at 2.25 pence per share | 14,314,689 | 14,315 | ||
Issued 27 September 2010 at 1.25 pence per share | 1,400,000 | 1,400 | ||
Issued 28 September 2010 at 6.00 pence per share | 10,000,000 | 10,000 | ||
Issued 1 October 2010 at 6.00 pence per share | 998,460 | 999 | ||
Issued 11 October 2010 at 6.00 pence per share | 20,000,000 | 20,000 | ||
Issued 11 October 2010 at 2.10 pence per share | 1,007,143 | 1,007 | ||
Issued 11 October 2010 at 1.25 pence per share | 150,000 | 150 | ||
Issued 14 December 2010 at 15.00 pence per share | 2,666,667 | 2,667 | ||
Issued 29 December 2010 at 14.19 pence per share | 4,227,967 | 4,228 | ||
At 31 December 2010 | 682,439,017 | 682,439 | ||
Capital Management | |
Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.
The Group's debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the group's capital by assessing the group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior period. |